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Global stock market plunges as Chinese real estate giant Evergrande is on the verge of collapse

The global stock market plunged on Monday as Chinese real estate giant Evergrande was on the verge of collapse and triggered global sales.

The once mighty Evergrande Group has accumulated over $ 300 billion in debt, crushing credit ratings, stock prices and reputation among former enthusiasts.

Rumors of turmoil urged company bosses to swear “severe punishment” to six top executives on Saturday after it was discovered that they had redeemed their investment products before the maturity date.

Well, defaults seem almost inevitable, but trade floors around the world are trapped in fear that blood baths can cross. ChinaAt the border, investors are already wary of rising wholesale gas costs.

Wall Street joined the global market this morning, with Dow Jones down 1.7% after London fell 1.5%.

Throughout last week, the concourse outside the Evergrande Mirror Office in a city in southeastern Shenzhen was occupied by unpaid contractors, angry distributors and investors.

Taken on September 17, 2021, this aerial photograph shows the mixed use of the Evergrande Cultural Tourism City under construction in Taicang, Suzhou.

The FTSE 100 fell on Monday morning and recovered slightly by the afternoon.

Wall Street follows Asia and Europe, with the Dow Jones Industrial Average falling 1.7% in the open.

The FTSE 100 (left) and Dow Jones (right) were shaken by the turmoil in the Chinese market on Monday. Wall Street follows Asia and Europe, with the Dow Jones Industrial Average falling 1.7% in the open.

In a clear reaction to rumors that it offended investors, Evergrande offered property and parking space in lieu of cash repayment of its debt. Investors gave the plan a frosty welcome because of the collapse of faith.

“What I want is cash,” said an investor who identified himself only by his name Feng. “I’m not considering this plan.”

Dissatisfied Evergrande staff told AFP that they were forced to sell more or invest more in financial products that promise generous returns.

According to staff and advertising confirmed by AFP, the rate of return ranged from 7-9%.

“They urged us to improve performance and reward us,” said Evergrande Wealth’s sales consultant, subject to anonymity.

However, she claimed that it became impossible to contact the manager in early September when the company began to face problems in making repayments-causing caution.

Emotions abroad are depressed by strong inflation, Federal Reserve plans to curtail monetary policy, a surge in infections with delta variants of the coronavirus, and signs of weak global recovery.

Wall Street followed Asia and Europe, with the Dow Jones Industrial Average declining 1.7% in the open and the tech-heavy Nasdaq declining 1.8%.

Hong Kong plunged 3.3% earlier, leading the loss in Asia, and Evergrande was widely expected to default on interest payments this week.

Frankfurt’s newly expanded index fell 2.6% in the afternoon trading, while Europe fell 1.5% in London and 2.2% in Paris.

Global oil prices held back previous losses, but remained low due to concerns about energy demand.

Looking at Evergrande, Thinkmarkets analyst Fawad Razakzada said, “Can investors contain the fallout from the potential for a chaotic collapse of a company with heavy debt by Chinese authorities? I’m not sure, “he said.

“This can affect many other companies, so the risk of transmission can be much wider than the market currently expects,” he added.

Evergrande, one of China’s largest developers, is on the verge of collapse with over $ 300 billion in debt.

Mining stocks have been hit hard by the potential economic impact on China, which has a strong desire for raw materials.

“China’s recession will have a significant impact on commodity demand given its position as the world’s largest consumer of many minerals and metals,” said AJ Bell analyst Russ Mold. rice field.

Anxiety has also risen over soaring wholesale gas prices, fueling global inflationary pressures and raising concerns from the world’s largest central bank.

Against this backdrop, the Federal Reserve Board’s monetary policy meeting will be particularly important, according to Markets.com analyst Neil Wilson.

A woman passing by a bank's electronic bulletin board showing Hong Kong's stock index on the Hong Kong Stock Exchange in Hong Kong on Monday

A woman passing by a bank’s electronic bulletin board showing Hong Kong’s stock index on the Hong Kong Stock Exchange in Hong Kong on Monday

“Does China’s real estate collapse and energy crisis clash with expectations of the Fed’s rate hikes and rising inflationary pressures next year?” He wrote in a note to his customers.

“It’s a pretty nasty cocktail for risk appetite, and I think these are the risks that are priced for sale today.”

Returning to Hong Kong, real estate companies and banks were at the mercy of mass sales.

Evergrande’s share price plunged nearly 19% temporarily and then fell 10%, causing similar losses to Henderson Land and the New World Development.

Meanwhile, the Hang Seng Index fell by more than 6%, the worst performance since May 2020.

Tokyo, Shanghai, Seoul and Taipei were closed due to holidays, but sales were reflected elsewhere in Asia.

Despite the growing crisis, the Chinese government has not yet intervened to prevent the collapse of the Evergrande.

In addition, the emergence of a new delta in China has raised concerns about its impact on the recovery of the world’s second-largest economy. This remains a major driver of global growth.

And in the United States, Congress is drawing attention as a political battle is imminent over raising the federal debt cap.

Treasury Secretary Janet Yellen recalled in a 2011 Wall Street Journal article that the debt-ceiling crisis pushed America to the edge of the crisis, and Washington’s default “may cause a historic financial crisis.” Is expensive. “

Once a symbol of that power, Evergrande’s Shenzhen headquarters has become a besieged barometer of a wide range of potential incidental damages, with investors, suppliers and other partners on a daily alert. ..

A ticker board outside the Hong Kong Stock Exchange shows that the market is slumping on Monday

A ticker board outside the Hong Kong Stock Exchange shows that the market is slumping on Monday

Cleaner Wang De Meij, 40, slept outside on cardboard and asked for an unpaid salary of 70 people who helped arrange to provide cleaning services to Evergrande.

She borrowed money from Loan Shark to pay some staff, but said, “We can’t repay these (loans).”

Meanwhile, a sales consultant said that if Evergrande fails to resolve the debt repayment problem, hundreds more financial managers could lose their careers.

“Our personal trust has collapsed,” she added.

SMEs across the country also said that financial stress has forced workers to be dismissed, reduced or shut down altogether.

But many people remember the evergrande differently.

“The original purpose was to allow working families to afford an apartment,” said a retired teacher named Liu.

Since 1997, she and her husband have lived in the first housing estate built by Evergrande in Guangzhou, where the company was founded.

“Evergrande is not a terrible company … it’s the company that has taken care of us,” she said.

Global stock market plunges as Chinese real estate giant Evergrande is on the verge of collapse

Source link Global stock market plunges as Chinese real estate giant Evergrande is on the verge of collapse

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